Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question

Transcribed Image Text:**Question:**
An unregulated monopolist would *not* use which of the following:
- ○ marginal cost pricing
- ● the profit-maximizing rule
- ○ price discrimination
- ○ economies of scale
**Explanation:**
This question is designed to test your understanding of monopolistic behavior in an unregulated market. An unregulated monopolist typically aims to maximize profits by setting prices above marginal cost, making "marginal cost pricing" the correct answer to the question of what they would not use. The other options represent strategies that monopolists can use to increase their profits or reduce costs.
Expert Solution

Step 1: Define monopoly
A single seller in the market for goods is called a monopoly market. Marginal revenue is the demand for monopolists and it is a downward sloping curve. If the marginal revenue and cost are equal the monopolist maximises their profits.
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